Abstract
This study examines the steel-related export structure of the 15 largest steelmaking economies in 2015. The study provides a broad view of linkages between steel-related export structure, steelmaking technologies, and the level of economic development of each economy. To shed light on exporters’ patterns of specialisation, indices of revealed symmetric comparative advantage are used, indicating that patterns of steel exports differ widely across economies. In addition, this study focuses on the difference between steel exports in volume and value terms amid growing debate over the issue of value creation caused by excess capacity in the steel industry. This study concludes that the choice of steelmaking technologies and the level of economic development are significant determinants of trade specialisation patterns in major steelmaking economies. Although emerging market and developing economies have played a significant role in volume terms in the global steel market, advanced economies still have a crucial role as key suppliers, especially for high value-added products.
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Notes
The global export ratio (exports as a percentage of production) increased from 29.4% in 2010 to 30.7% in 2015 (World Steel Association 2016a).
The definitions of advanced economies and emerging market and developing economies in this study are based on the International Monetary Fund’s (IMF) World Economic Outlook Databases (IMF 2016).
Gerschenkron (1962) introduced the concept of ‘advantage of economic backwardness’ as a means of identifying the development mechanism in developing economies, suggesting that a late-starting industrial economy might be able to enjoy faster growth than advanced economies by importing existing technology from abroad.
China has been the driving force of the global steel industry over the past decade, although some industry analysts have pointed out that Chinese steel production might have already reached its peak and is likely to stabilise in the coming years (OECD 2015b). China’s steelmaking capacity, which was less than 200 mmt per year during 1970–2002, began rising sharply in 2003 and reached 1154 mmt in 2015, accounting for 48.4% of global nominal crude steel capacity, according to WV Stahl (2016).
It should be noted that intra-regional trade has been significant in some regions (e.g. European Union or North American Free Trade Agreement), according to the World Steel Association (2016a).
Detailed steel export indicators are presented in Appendix Table 5.
For an explanation of each product, see, for example, De Carvalho and Sekiguchi (2015).
Although Iran was ranked the 14th largest steel producer in the world in 2015, it is excluded from this study because of lack of detailed trade data.
Globally, the BF/BOF route has been the major steelmaking technology, accounting for 74.2% of global crude steel production in 2015, but patterns of steel production by process vary significantly across regions.
However, this does not apply to some economies. For example, the USA has been a major EAF producer, and several DRI-based mini-mill projects have been announced in recent years to take advantage of shale gas developments (OECD 2015a).
The level of economic development is a dummy variable that takes a value of 1 for advanced economies and 0 for emerging market and developing economies. Steelmaking technology is a dummy variable that takes a value of 1 for the BF/BOF route and 0 for the EAF route. Production item is a dummy variable that takes a value of 1 for flat products and 0 for long products.
Other steel products range from wire to steel castings.
It should be noted that China’s implied ingots and semi-finished exports, derived from world ingots and semi-finished imports from China, reached 8.1 mmt in 2015, its third largest export item. China is ranked second behind Russia but ahead of Brazil and Ukraine, according to data derived from world ingots and semi-finished imports.
This is a high-value product; its unit export value was USD 1541 per tonne in 2015.
For example, Hyundai Steel completed its integrated mill project at its Dangjin works by blowing in its three blast furnaces between 2010 and 2013, and thus, South Korea now has two integrated mills. In addition, major South Korean steelmakers have commissioned new plate mills and hot strip mills over the past few years.
Although the economy has the world’s highest RSCA value for electrical sheets in volume terms, the export unit value was USD 600 per tonne in 2015.
Steel castings (product code 732599) are the most competitive export product of other steel products in India, with RSCA values greater than 0.8 in both volume and value terms.
The author thanks an anonymous referee for bringing these issues to attention.
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Sekiguchi, N. Trade specialisation patterns in major steelmaking economies: the role of advanced economies and the implications for rapid growth in emerging market and developing economies in the global steel market. Miner Econ 30, 207–227 (2017). https://doi.org/10.1007/s13563-017-0110-2
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DOI: https://doi.org/10.1007/s13563-017-0110-2